Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

Which of the following is an example of poor internal control in an organization?

Segregating duties among different employees

Conducting regular independent audits

Requiring two signatures on checks above $5,000

Allowing the same employee to both authorize and record transactions

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Verified step by step guidance

Understand the concept of internal control: Internal control refers to the processes and procedures implemented by an organization to safeguard its assets, ensure the accuracy of financial records, and promote operational efficiency.

Review the examples provided in the problem: Segregating duties, conducting audits, requiring multiple signatures, and allowing the same employee to authorize and record transactions.

Analyze each example: Segregating duties, conducting audits, and requiring multiple signatures are all examples of strong internal control practices. These measures reduce the risk of fraud and errors.

Identify the poor internal control example: Allowing the same employee to both authorize and record transactions is a poor internal control practice because it creates an opportunity for fraud or errors to go undetected. This violates the principle of segregation of duties.

Conclude the reasoning: Segregation of duties is a key internal control principle that ensures no single individual has control over all aspects of a financial transaction. Allowing one employee to handle both authorization and recording undermines this principle.